McDonald’s momentum remains strong but considers buying lower

on Apr 19, 2022
Updated: Apr 20, 2022
  • McDonald's has been surging since March 10.
  • The stock has met resistance at $255 and looks to break above.
  • MCD could drop to $244 support before the earnings release.

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McDonald’s Corporation (NYSE:MCD) has enjoyed a stellar rise over the last one month. Since touching a low of $218 on March 10, the stock has been on a robust uptrend. The stock touched a high of $255 on April 7 and is now retreating as the level remains a crucial resistance.

 Toward the end of February, the stock faced weaknesses due to the Russian impacts. It has since recovered, with Oppenheimer analysts labeling the stock as “attractive” and one which has priced itself into the Ukrainian conflict. Even as inflation runs hot, McDonald’s is expected to gain, as Oppenheimer says the company will benefit from the elevated pricing.

McDonald’s reports its Q1 2022 earnings on April 28. The company already has a “high” Earnings Quality Ranking” for the sixth straight time. With the robust earnings rank, it means that the company’s future earnings are expected to be good.

Zacks Investment Research has a consensus of $2.19 EPS in the first quarter, compared to $1.92 in the prior-year quarter. Investors could now turn to the earnings results before taking the stock higher above the resistance.

MCD meets resistance at $255

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Source – TradingView

Technically, McDonald’s has met resistance at $255. Investors could become cautious ahead of the earnings, with the stock likely to fall in the next few days. The stock could find support at $244, awaiting the earnings report.

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Estimate-beating earnings could see the stock continue the current uptrend. If the case of earnings misses and the $244 support fails to hold, the next level would be at $237.

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McDonald’s could take a breather from the $255 resistance. The stock will find support at $244 or lower at $237. Investors should take a chance at a lower price after the earnings.

The stock could as well be bought if it successfully clears $255, with a target at $261. Buying on a retreat would offer a better risk-reward ratio.


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